The Network
Thanks For Sticking it Out, Let’s Talk About Bitcoin — Post #10
A network is a bunch of computers that are linked together. There are a few ways that this can be done.
One way is with a centralized network. In a centralized system when two computers “talk” they send information through another (third) computer.
- If I want to send a message to Tyler via Facebook. The message doesn’t go directly to Tyler. It goes to a server on Facebook and then from Facebook’s server to Tyler. See Figure A.
- Another example is paying with a credit/debit card. You don’t give the cashier the money directly, it must be sent through the card company.
In a decentralized network, there are multiple ways to send a message. It doesn’t rely on one central member but sometimes requires key intermediaries to send the message. See figure B.
- If you are going to send the letter to your neighbor, the letter needs to go through only your local post office. This would require 1 intermediary but you could also just deliver the letter yourself.
- If you send a letter to your aunt who lives in a different zip code. The letter will go to your local post office and travel to her local post office before it is delivered to her mailbox. 2 intermediaries are used.
- If you send a letter to your Grandma in Maine. The letter will go to many post offices before it is delivered. Many intermediaries are used.
A distributed or (peer-to-peer network) is a network where everyone contributes equally to the transfer of information. See figure C.
- Think of passing notes in a classroom. If you want to send a note across the room, the note will have to go through many people. If someone refuses to pass the note, there are other routes. This means the network will still be active even if some people don’t participate.
A distributed network is useful because everyone sees the note, it is stable, easy to scale, and easy to join. Most importantly the users decide the rules instead of just one user.
Bitcoin is capable of being a completely distributed network. Currently, it could be categorized somewhere between a decentralized and distributed network. This is due to how people use Bitcoin. When people use a company to manage their bitcoins, they rely on those companies to send/receive their transactions, so it becomes less distributed. This fluctuates depending on the users.
This is the first characteristic of Bitcoin. It is decentralized.
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This is post #10. The others are located here.
Any comments or suggestions or topic requests? Get in touch or email me at miketalksaboutbitcoin@gmail.com
